Time Inc. “Rationalizing” Portfolio as Q1 Shows Continued Decline
Share price plummets after Time Inc. said revenue fell by 8 percent for the quarter.
In an earnings announcement Wednesday, the company also said that it has identified "non-core assets," which it will begin to divest shortly. It's not clear which assets will be sold, but the news of a potential selloff comes just days after Time Inc. said it would follow its own strategic plan instead of seeking a sale of the whole company.
Also Wednesday, CEO Rich Battista told investors that Time Inc. is investing in “an aggressive cost re-engineering program” along with “rationalizing” its portfolio — a phrase that usually refers to shutting or selling properties.
Overall revenue for the quarter was $636 million, including $212 million from print advertising (down 21 percent from the same period in 2016) and $119 million from digital advertising, which increased by 32 percent.
Circulation revenue also decreased by 14 percent, or $33 million, which the company attributed to changes in frequency across brands, as well as a consumer preference for digital media.
Operating income was reported at a loss of $26 million, following decreases in revenues as well as large restructuring costs, to the tune of $16 million, that followed a year of layoffs and the resulting severance payments.
Shareholders responded unfavorably to Wednesday’s report, with shares dropping from $15.13 on Tuesday afternoon to $12.25 Wednesday morning. At press time, shares had stabilized around $13.08.
It’s a rocky start to 2017 for Time Inc., which last month appeared to have closed the door on acquisition discussions with multiple parties, at least for the time being. Meredith Corp. reportedly valued the company at $18 per share — below the $20 per share that Time Inc. supposedly sought.
As Battista promised a brighter future, former CEO Joe Ripp said goodbye to yesterday. Ripp is leaving his role as executive chairman of Time Inc., as is board member Howard Stringer. Ripp is being replaced by John Fahey as non-executive chairman of the company. Dan Rosensweig, president and CEO of the learning platform Chegg, Inc., has also been nominated to the board.
Editor's note: An earlier version of this story reported that Time Inc. had rejected an offer from Meredith Corp. Time Inc. has not confirmed that claim. View the company's official statement here.